What Is Statutory Paternity Pay? Learn The Essentials
In the UK, there are various workplace entitlements that facilitate employees in several respects, like tax reliefs, PAYE deductions, automatic pension enrollment, and statutory leaves. Notably, the statutory leave entitlements are essential benefits established to support employees during vital life events, such as childbirth or adoption. Furthermore, statutory leave provisions include different categories, like Maternity Leave, Paternity Leave, Adoption Leave, and Shared Parental Leave. With each ensuring financial assistance and job security during an employee’s absence from work. More specifically, understanding what is Statutory Paternity Pay (SPP) can be immensely crucial for employees.
It is what this guide will elaborate on. We will explain all the essential aspects involved in learning what is statutory paternity pay, including its eligibility criteria, payment rates, and how to claim it in accordance with HMRC guidelines.
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What Is Statutory Paternity Pay?
In simplest terms, Statutory Paternity Pay (SPP) is a government-mandated payment made to eligible employees who take Paternity Leave after the birth or upon the adoption of a child. The paramount purpose of this pay is to extend financial support to new fathers or partners while they take time off work to bond with their children and support their families. Further elaborating, it is a vital financial benefit available to fathers to stay relaxed regarding expenses while building a connection with a newly born or adopted child. It is worth asserting here that Statutory Paternity Pay is a weekly payment that employers offer only to qualified employees who meet the eligibility criteria.
In brief, under UK employment law, Statutory Paternity Pay is an essential right aimed at promoting employees’ work-life balance and supporting parental responsibilities.
Who Is Eligible For Statutory Paternity Pay (SSP)?
The UK government launched the SPP to provide temporary financial relief to employees to ensure they can take time off work without a significant loss of income. However, not every employee can qualify for it. Therefore, it is crucial to know the eligibility criteria when understanding what is statutory paternity pay. To qualify for Statutory Paternity Pay, an employee must meet the following criteria:
Relationship To The Child
It is crucial that you are:
- the baby’s biological father or adopter,
- The birth mother’s spouse, civil partner, or partner (if they live together), or
- The adopter’s spouse, civil partner, or partner,
- You are responsible for the child’s upbringing.
Employment Status
You must be employed and classified as an employee, not a self-employed individual.
Earnings Threshold
It is another criterion for you to be earning at least £125 per week (before payment of tax).
Length Of Employment
Your duration of employment is another necessity for you to be eligible for the statutory paternity pay. To clarify, you must have worked for the employer continuously for at least 26 weeks by the end of the 15th week before the baby’s due date or the week the adoption process begins. Moreover, you must have remained employed without interruption until any day in the qualifying week, i.e., the week your wife, partner or civil partner was matched with a child. For your ease, you can calculate your qualifying week by using a calendar and counting back 15 weeks from the week the baby is due.
Notice Requirement
As stated above, you must keep your employer informed or notified at least 15 weeks before the baby is expected to be born or within 7 days of being matched for adoption.
However, you must remain mindful that you cannot begin paternity leave before the child is born or placed. For greater clarity, consider you have given notice to your employer about your paternity leave while the baby is not yet born. In such an event, you must continue to work, and your leave will commence the day after the baby is born or the child is put with you or any other day you have specified.
How Much Statutory Paternity Pay Will You Get?
Figuring out how much pay you will get is an integral part of understanding what is statutory paternity pay. According to HMRC rates, Statutory Paternity Pay is calculated as the lower of:
- £187.18 per week, or
- 90% of the employee’s average weekly earnings.
For instance, if your average weekly earnings are £125 or more (before tax), Statutory Paternity Pay is paid for one or two consecutive weeks at £187.18 or 90 per cent of your average weekly earnings if this is less. It is noteworthy that you receive Statutory paternity pay in the same way you received your wages,i.e., weekly or monthly. Now, since SSP is treated as your normal salary, it will also be subject to income tax and NIC payments. Consequently, tax and NICs will be deducted from your paternity pay, just like your wages.
For a better understanding, an employee’s tax and NICs deductions are made under the Pay As You Earn (PAYE) system. With PAYE, an employer makes the necessary deductions from the employee’s wages before their paychecks are distributed. Subsequently, PAYE streamlines the tax collection process, making it easier for individuals to fulfil their tax obligations without dealing with their payments independently. Thus, if you are keen on gaining an in-depth look at PAYE, our following detailed guides will answer all your crucial questions about PAYE:
How Long Is Paternity Leave, And When Can You Take It?
When learning what is statutory paternity pay, you will certainly want to know how long your paternity leave lasts, and when you can claim it. As per the HMRC guidelines, eligible employees can take one or two consecutive weeks of Paternity Leave. In addition, the leave must:
- You will be paid for up to 2 weeks, and your employer will usually pay it on the agreed-upon date with you.
- Start on or after the child’s birth or adoption placement. It implies that you will get the Statutory Paternity Pay while on leave.
- It will be completed within 56 days (8 weeks) after the birth or adoption date.
- Unlike Maternity Leave, Paternity Leave cannot be split or divided into separate weeks. On the contrary, it must be taken in one continuous block.
Apart from that, it is worth highlighting here that your employer must confirm the start and end dates for your SPP when you claim it. Lastly, if you want to change the start date, it is mandatory for you to give your employer 28 days before the scheduled period of your paid leave starts.
How To Claim Statutory Paternity Pay?
After coming to grips with what is statutory paternity pay, it is time to learn how employees can claim it. Noteworthily, to receive SPP, employees must follow these steps:
Notify Employer In Advance
You must inform or notify your employer at least 15 weeks before the baby’s due date. To this end, you will provide them with the details of the expected week of childbirth or adoption placement date, alternatively. Take note that you must also explicitly state how much leave you intend to take (e.g., one or two weeks).
Submit The Correct Forms
Next, you may need to fill out an SC3 (for birth parents) form or an online form (previously known as SC4). It is relevant to mention here that an employee uses an SC3 form when they become a birth parent and want to apply to their employer for Statutory Paternity Pay (SPP) and leave.
Employer Verification And Payment
After you have applied for the SPP, your employer will review and determine your eligibility and process payments through payroll. Finally, as we pointed out above, the amount will be included in your regular wages after accounting for the necessary deductions.
What Happens If An Employer Refuses To Pay SPP?
When comprehending what is statutory paternity pay, have you wondered what happens if an employer turns down their employee’s request to take paternity leave? Principally, when an employee believes they meet the eligibility criteria, yet their employer refuses to pay Statutory Paternity Pay, they can first check eligibility with HMRC and contact it for confirmation. Alternatively, employees can raise a formal complaint with their employer. Upon broaching the matter with the employer, the employer is obligated to complete and give you form SPP1, outlining the reason you were not paid your Statutory Paternity Pay. Visit the government website to learn more about the SPP1 form.
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Conclusion
All in all, learning what is Statutory Paternity Pay (SSP) is crucial since the fundamental objective of this entitlement is to provide financial support to new fathers or partners. It gives the new fathers a fruitful opportunity to take time off work to bond with their children. Likewise, employers are also instrumental in ensuring compliance with HMRC guidelines, processing payments correctly, and reclaiming reimbursements where allowed.
Further down the line, managing payroll obligations, including Statutory Paternity Pay, cannot always be a cakewalk for businesses, especially small business owners. It is because the valuable time and strenuous efforts that are needed to flourish the business cannot be downplayed. On the contrary, with in-house payroll processing, not only do the costs increase, but it is also time-consuming. However, keeping you stress-free is what the accountants at Payroll Services Accountants work tirelessly for. Our certified and expert accountants can help businesses effectively with payroll outsourcing, PAYE responsibilities, CIS requirements, ensuring compliance with HMRC regulations, and streamlining tax payments. Whether it is payroll processing, tax deductions, or statutory leave entitlements, you can witness a smooth and error-free experience with our professional support. Thus, if you are looking for customised payroll solutions, contact us today via our instant quote and stay compliant with UK employment laws!
Disclaimer: The content contained in this blog is exclusively aimed at informational purposes and should be treated as such. While it has been written with thorough scrutiny at the time of writing to ensure every information is correct, no warranty for the acceptance of any error or inaccuracy is given. It is not a piece of absolute financial advice, nor is it expert legal advice. Hence, it is advised to consult a professional before acting upon any information stated herein.
